Sebelius And Health Care Exec Clash At AHIP Conference

March 10, 2010 8:07 a.m.

They were like yin and yang, oil and water. Health and Human Services Secretary Kathleen Sebelius and America’s Health Insurance Plans CEO Karen Ignagni couldn’t agree on much today when they debated health care reform at AHIP’s conference in downtown Washington, D.C.

Sebelius challenged to insurers to embrace the Obama administration’s health care reform efforts before it’s too late. Directly after she finished speaking, Ignagni took to the mics to challenge the administration to abandon its efforts to reform the way health insurance works in America — before it’s too late.

The lines appeared to be drawn.Sebelius appeared before AHIP to ask the insurance companies for their help anyway.

“You have a choice,” she said in the prepared remarks distributed by her office directly before the speech.* “You can choose to continue your opposition to reform.”

Or, she said, there’s the other option. “You can choose to take the millions of dollars you have stored away for your next round of ads to kill meaningful reform, and use them to start giving Americans some relief from their skyrocketing premiums,” Sebelius said. “Instead of spending your energy attacking the parts of the President’s proposal you don’t like, you can use it to strengthen the parts you do.”

[TPM SLIDESHOW: The Protest Option: March For Health Care Reform In DC]

For its part, AHIP has pushed back hard, firing off a million dollars’ worth of ads claiming that it’s not responsible for the rate hikes. Insurance companies are also among the groups funding a multi-million dollar ad campaign led by the Chamber of Commerce claiming that the bill Obama wants passed will lead to pestilence and ruin for all it touches.

Sebelius agreed to appear at the AHIP conference yesterday, despite the fact that the administration has seemingly left the insurance industry behind in the final push for reform. President Obama is crisscrossing the country this week slamming the insurers that fund AHIP for raising premiums in a way that he says forces average Americans to drop their coverage or go bankrupt paying them. Obama has said it’s time for debate on a health care bill to end, and for the Democratic majorities in Congress to stop talking and pass reform now.

A Democratic source told me that in the current climate there was no way Sebelius wasn’t going to show at AHIP today. A week ago, she admonished the insurers over the rate hikes in a closed door session. The chance to do it before the cameras was just too much for the White House to resist.

Sebelius didn’t come only to criticize the insurers to their faces, though. She told the AHIP crowd that unless health care reform is passed now, the rising costs of care — and the associated rising premiums — are “unsustainable.”

“Employers will not be able to provide care,” she said. “And Americans will continue to dread opening the next premium statement or bill from their insurance company.”

After Sebelius had finished, it was Ignagni’s turn to do the admonishing. Speaking to reporters at a press conference immediately following Sebelius’ remarks, Ignagni ripped the administration for continuing to attack her industry.

Reform proponents have “resorted to the usual game of vilification,” she said. “There has been a coordinated attack on the good people in this industry.”

Ignagni all but rejected any chance that the two sides can come together in what Democrats insist are the final days of the reform debate. She echoed the concerns leveled by business groups at the Obama reform plans — rather than lower costs and expand coverage, it will actually increase costs, Ignagni said, leading to fewer people with insurance.

In Ignagni’s telling, the economic hardship came first. When people began cutting health insurance out of their budgets over the past year, she said, costs for insurers went up as their pool of premium holders shrank. Without a strong mandate in a reform bill, she said, the problem will get worse.

AHIP has long advocated a tough, well-enforced mandate be included in health care reform. Critics claim that this is due to the fact that the stronger the mandate, the more new customers health insurers can add to their rolls. But Ignagni said today that by imposing only “de minimis penalties” on families who don’t buy insurance, Obama’s reform plan means that families struck by economic hardship will continue to stop buying insurance, which will in turn raise costs for insurers.

A year ago, insurance companies and Obama were in the same room, talking about how to make health care coverage in America better together. At the time, it seemed that both sides — who have been natural enemies in the debate over how to get Americans cheaper, better care — might find some common ground.

Twelve months later, however, when both sides were in another room together, the end result was an expression of how far apart insurance companies and the White House remain.


Correction: This post incorrectly attributed Sebelius’ remarks to her, rather than to the prepared remarks distributed by her office prior to the speech. We regret the error.

Late Update: Sebelius’ remarks differed somewhat from the prepared text her office distributed before the speech. Some have suggested the language in the speech was softened when Sebelius delivered it. Here’s the relevant section of Sebelius’ speech as delivered, from the official transcript from the event provided by HHS:

So there’s a choice on the table. Continue the opposition to reform, and if you do, and reform fails I can give you a pretty good prediction of what happens next. By next March when you’re meeting again, premiums will take an even bigger bite out of American’s wages. Your market will shrink even further; more American’s will lose their employer sponsored insurance, and we will have a situation where the market is unsustainable. Small businesses will be looking at a situation where they will be either forced to cancel their employees’ coverage, they won’t be able to hire new employees, or they will lose their best employees to go down the street or around the corner to someone who has a better health care deal for themselves or their families.

Parents and children with pre-existing will be shut out of the insurance market or terrified about what happens if they leave their current job. And Americans will continue to dread opening the next premium statement or the next bill. And that strategy may work in the short-run. I read about a recent Goldman Sachs investor call where there was advice about continuing to make money even if the customer pool shrinks, because the rate increases will more than cover the lost customers. But that only works for a while. That kind of short-term strategy won’t work in the long run. It won’t work for the American people and it certainly won’t work for our healthcare system.

So, there is another choice. I am hopeful that you will take the assets that you have and the influence, and the bully-pulpit that you have, and use it to start calling for comprehensive reform to pass. Start looking at giving Americans some relief, with market-strategies from those who are facing skyrocketing premiums. Instead of spending energy attacking the parts of the proposal that you don’t like, come to the table with strengthening the parts that are there, that you talked about from the beginning are essential to comprehensive reform.

The second choice, really may give off some short-term profits. But we also, working together could create a sustainable health insurance market where Americans would still be able to buy coverage. It’s better for the American people. I think it’s better for the insurance industry and it’s certainly better for our health care system.

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